Thomson Reuters and NASDAQ: Shedding Weight

July 17, 2013

A year or so ago, a client asked the ArnoldIT team to take a look at Thomson Reuters. The results were not particularly surprising. The company continued to undergo management shake ups, product proliferation via XML-powered slicing and dicing of content, and various MBA maneuvers to make the numbers look as good as possible. In short, nothing surprising.

What emerged from our analysis was a series of observations about the future of Thomson Reuters. One of the points was, “Thomson Reuters will either have to sell part of itself or some of its crown jewels.”

“Nasdaq Closes Thomson Reuters Deal” suggests that our observation was mostly correct. According to Zacks:

Announced in Dec 2012, the deal was inked for $390 million, whereby the company had agreed to obtain the Public Relations, Investor Relations and Multimedia Solutions businesses of Thomson Reuters. These three businesses will now be amalgamated with Nasdaq’s Global Technology Solutions operations.

Thomson Reuters still has some work to do to get back on the fast-growth track. However, the job is not likely to be quick or easy. The company has markets which are shrinking. The demand for some of the firm’s reference products continues to soften. Competitors face essentially the same problems so traditional professional publishing companies are growing more vulnerable to what MBAs once called “discontinuities.”

What we will be looking for includes:

More divestitures. Thomson has been a fan of acquisitions, but what the company sheds is often far more important to Thomson Reuters’ watchers
More cost cutting. Thomson Reuters has made all of the easy cost cuts. The ones which may come in the future will draw blood and may harm the company’s long-term prospects
More competition. With traditional professional publishing products and services holding the line on pricing, some upstarts will be angling for a share of the once-endlessly lucrative markets companies like Thomson Reuters once called their back yard.

Exciting times ahead for professional publishing companies.

Stephen E Arnold, July 17, 2013

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Stephen E. Arnold monitors search, content processing, text mining and related topics from his high-tech nerve center in rural Kentucky. He tries to winnow the goose feathers from the giblets. He works with colleagues worldwide to make this Web log useful to those who want to go "beyond search". Contact him at sa [at] arnoldit.com. His Web site with additional information about search is arnoldit.com.